Few firms can match Rothschild & Co when it comes to the longevity of their client relationships — its oldest has endured for more than a century. In a business such as corporate debt advisory, in which relationships are crucial, that kind of lineage is an important advantage.
Rothschild & Co’s business model is built around these relationships, so whether a client wants to discuss a revolving credit facility, acquisition finance bank debt, a public bond or a private placement, he or she will have the same point of contact at the firm and not be handed on to a different team. “All these debt products are about companies selling their credit stories to a lender group,” says Francis Burkitt, managing director, debt advisory at Rothschild & Co in London.
“It’s as much as about people as it is about companies,” adds Richard Sedlacek, managing director, debt advisory at Rothschild & Co. “There is a lot of change at the finance level, whether that’s at board or treasury level and as people move it’s amazing how quickly they pick up the phone to continue the relationship at their new company.”
In the bond market, the job itself is simple, says Burkitt. “We help 40 or 50 companies do bond issues every year, whereas the treasurer or CFO might do one every two or three years. It’s straightforward knowledge transfer. We’re not bookrunners, we’re not arrangers. Our job is to sit at the shoulder of the corporate treasurer and help them get an issuance that is just a bit better than they could otherwise do for themselves.”
Reliability is key, he says. “We like to think that we help clients achieve a successful transaction and that’s why they keep coming back.”
The best way to achieve that, says Burkitt, is to ensure that the advisory role enables the client to look good. “It’s perhaps a little colloquial but we mean it quite seriously,” he says. “Our job is to help the treasurer make his or her company look really good to bond investors to drive down the pricing, to make it look good to the bookrunners, to the board, to the shareholders and we know of course debt looks good when the shareholders don’t notice it’s there and there are no problems.”
The spectacular growth of the environmental, social and governance (ESG) bond market is providing another new string to the bow for Rothschild & Co “Green and more generally ESG has been a big thing for us and it’s a very serious commitment,” says Burkitt.
The firm worked on FTSE 100 educational publisher Pearson’s ground‑breaking £350m social bond in May and on fashion group Burberry’s £300m sustainability bond debut in mid-September, while it was also involved in helping the City of London issue a green private placement, among other deals.
With the economy struggling under the pressures of the Covid crisis, corporates are once again — more than a decade on from the last financial crisis — re-examining the way they set up their balance sheets for resilience, and how they fund in the markets. It’s led to a rush to the bond markets.
“Covid reminded finance directors of the supreme advantage of uncovenanted bond issues,” says Burkitt. “It’s a fabulous thing in a crisis and we’ve been reminded once again that the companies that sailed through a crisis are those with long-dated uncovenanted bond issues. That’s why we’re seeing so much issuance right now.”
Sedlacek says that this shift is seeing firms reviewing their leverage as they seek to rely less on bank finance going forward.
“The crisis has opened up a whole piece of thinking through how companies might look at their capital structure going forward and searching for a route map towards a less-covenanted world,” he says.
But Covid hasn’t changed everything.
“Our job is to serve our clients, we’ve been doing that for 200 years, and we look forward to continue doing so,” says Burkitt.
